How Buy Here Pay Here Dealer Financing is Different From the Rest

Car key with a car keychain on it sitting on top of a blue and white car loan application with "APPROVED" stamped on it


If you have bad credit or no credit, chances are you’ll end up at a buy here pay here Cincinnati, Ohio dealership. Buy here pay here dealers operate differently than traditional ones, particularly when it comes to the financing. Since these dealerships primarily cater to consumers who have bad credit, the financial process has to be different. Which is why these dealerships are considered a saving grace by many consumers. For them, it’s their last shot at getting a car.

Still, that doesn’t mean you should walk into one blindly. Understanding how their financing is different from the other dealers ahead of time will allow you to prepare better. 


Bad Credit or No Credit Required


First, you need to have no credit or bad credit if you are thinking of looking for financing at a buy here pay here dealership. While you could shop at one of these with good credit, you are much better off looking for financing at a different type of dealership, or a bank. Why? Because the interest rate and down payment at a BHPH dealership are both higher-than-average for a consumer with a good credit rating. But, more on that later.

The important thing to remember is a BHPH dealership should be your last stop. This isn’t insulting to them, because they understand this. They know you are coming to them because they are the last hope; and they are more than happy to help you.


The Dealer is Also Your Lender


Because you have bad credit, the dealer is also your lender. This is the reason for guaranteed approval when bad credit consumers go to a buy here pay here dealership. Since they do all the financing in-house, they have the ability to take you on. Since they are personally taking you on, however, this means you will more-than likely have a higher than average downpayment and interest rate; compared to a good credit consumer, at least.

The interest rate isn’t the fabricated 30-50% you see plastered everywhere online, it’s sitting at more around 14%-20% depending on your credit and the dealer. This is a significant difference when compared to other lenders, and it’s because they are dealing with bad credit consumers and lower-priced used cars. Also, the downpayment is larger than average in order to help protect themselves if you default on the loan. This way, they are able to pay for the repo of the car (if needed) and not lose out on the deal too much.

At the end of the day, they are still a business. They need to figure out how to protect themselves while still helping you.


Monthly Payments Are In Cash


In order to make monthly payments, you will be going directly to the dealership. Typically with a bank or other dealership, you could just write them a check or have it taken directly out of your bank account. A buy here pay here dealership won’t accept a check, money order, or take it out of your bank account. Why? Because, they are dealing with consumers who have bad credit. The check might bounce, the money order might not be good, or the money might not be in the bank account when auto-pay attempts to withdraw it. Therefore, most buy here pay here dealerships will have you physically drive to the dealership to make your payments.

It’s not that they don’t trust you, they are just protecting themselves. Again, they are a business at the end of the day, and also need to look out for themselves.


The Shopping Experience is Upside Down


The whole shopping experience is completely different at a buy here pay here dealership as well. Typically, consumers who are looking for financing will look for a car they want, and then discuss financing after. At buy here pay here dealerships, the buying process is upside down. Instead, you will talk to a financial advisor at the dealership about what you can afford for a vehicle. After negotiating your financing, you will then be shown the cars that you can afford; and they might not be the ones you want.

That doesn’t mean you are going to be stuck in a junker, the dealership needs you in a reliable car just as much as you want to be in one. Why? Because, buy here pay here dealerships know that the less time you spend in the car equates to less money for them.

You probably won’t get the latest and greatest technology in a car, or one that has a sunroof and heated seats; but you will get a reliable one. Which, if you are shopping at a buy here pay here dealership, is the type of car you need: one that gets you reliably from point A to point B, without breaking the bank.


A One Stop Shopping Experience


The biggest difference between buy here pay here dealerships and others? It’s a one stop shopping experience. They take care of everything there: the financial advising, paperwork car-loan lending, selling the vehicle, and monthly payments. At a buy here pay here dealership, the whole process is consolidated and simplified. This is so consumers can relax if they don’t know what to do/feel like they are out of options after hunting for a car with no credit or bad credit.

A good credit consumer will go around shopping for the best rate and the best car, but a bad credit consumer only needs to worry about signing papers. At least there is a silver lining for the situation, right?


The Lines Are Blurring


The lines are starting to blur between buy here pay here dealerships and traditional ones. Now, traditional dealerships are starting to offer their own type of bad credit consumer financing. You might not see “buy here pay here” written across the windshields of cars, but phrases like “we finance” or “bad credit, no credit, no problem!” are code for buy here pay here.

Even so, the differences between buy here pay here dealerships and the traditional dealerships are still clear-cut, and they offer an easy and unique car buying experience for those with bad credit or no credit.